United Parcel Service
anticipates a sharp increase in ship capacity to avoid logjams in its network during the main vacation ship period, and the delivery giant is raising prices to offset offset this investment
The Atlanta-based company plans to deliver 800 million packages in the US between Thanksgiving and Christmas, compared to 750 million last year. Almost every delivery day during this route will have a volume of more than 30 million parcels.
To cope with the increase in packages being operated by online buyers, UPS is building more automated sorting hubs, including its third-largest US facility, which has just opened Atlanta. UPS says it added seven times more processing and sorting capacity this year than it did in 201
To offset these costs, UPS is raising its domestic delivery prices and adding surcharges for oversized packages. In the US business, unit sales increased 4.8% in the third quarter, the fastest growth since 2011.
UPS also works closely with more of its largest shipping customers
on a better forecast requirement during the period, including volume prediction based on shipping location and coordinating with shippers if they have promotions ,
The plans "We were constructively dissatisfied," UPS chief Jim Barber said about last week's performance over the past few years. "Our goal is that this peak is the summit that we all want to achieve through the eyes of our customers."
UPS reported a profit jump for the third quarter, supported by a lower tax rate. But the core operating result fell in its international division, where the company warned that trade policy had slowed business.
The profit also fell in the large domestic parcel business where sales increased 8.1% to 10.4 billion dollars, adding new buildings to its network as well as higher pension costs.
UPS shares fell 3% on Wednesday morning trading. The share has hardly changed in comparison to the previous year.
UPS counters declining profits by attempting to attract more high-value businesses – including small and mid-size customers and healthcare companies – to offset mostly low-margin shipments E-commerce
Overall, UPS posted a profit of 1, $ 51 billion or $ 1.73 per share, compared to $ 1.26 billion or $ 1.44 a share a year earlier. Excluding restructuring charges, adjusted earnings were $ 1.82 per share, according to analyst estimates. The company reiterated its guidance for the year, including a slight increase in guidance for free cash flow.
-Aisha Al-Muslim contributed to this article.
Please contact Paul Ziobro at Paul.Ziobro@wsj.com